GCC Equity Fund
(Managed by Alawwal Invest Company)
INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2019
GCC Equity Fund (Managed by Alawwal Invest Company)
The accompanying notes 1 to 11 form an integral part of these interim condensed financial statements.
2
INTERIM CONDENSED STATEMENT OF FINANCIAL POSITION (UNAUDITED) As at 30 June 2019
30 June 2019
31 December 2018
Notes SR SR
ASSETS
Cash and cash equivalents 657,235 5,605,874
Investments at fair value through profit or loss 4 8,481,874 18,082,716
Receivables and advances 6,110 5,175
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TOTAL ASSETS 9,145,219 23,693,765
───────── ─────────
LIABILITY
Accrued expenses 35,139 106,072
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EQUITY
Net assets attributable to the redeemable unitholders 9,110,080 23,587,693
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Units in issue 605,921 1,787,738
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Net assets value attributable to each unit 15.0351 13.1942
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GCC Equity Fund (Managed by Alawwal Invest Company)
The accompanying notes 1 to 11 form an integral part of these interim condensed financial statements.
3
INTERIM CONDENSED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED) For the six-month period ended 30 June 2019
Notes
2019
SR 2018
SR INCOME
Net gain from investments at fair value through profit or loss 5 2,161,997 2,403,612
Dividend income 447,431 469,085
───────── ─────────
2,609,428 2,872,697
───────── ─────────
EXPENSES
Management fees 8 (199,067) (255,137)
Other expenses 7,8 (81,405) (47,199)
───────── ─────────
(280,472) (302,336)
───────── ─────────
PROFIT FOR THE PERIOD 2,328,956 2,570,361
Other comprehensive income - -
───────── ─────────
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 2,328,956 2,570,361
═════════ ═════════
GCC Equity Fund (Managed by Alawwal Invest Company)
The accompanying notes 1 to 11 form an integral part of these interim condensed financial statements.
4
INTERIM CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED) For the six-month period ended 30 June 2019
2019
SR 2018
SR CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the period 2,328,956 2,570,361
Adjustments to reconcile profit for the period to net cash flows: - - Unrealized gain on investments at fair value through profit or loss (976,863) (2,495,124)
───────── ─────────
1,352,093 75,237 Working capital adjustments:
Decrease in investments at fair value through profit or loss 10,577,705 141,365
Increase in receivables and advances (935) (29,445)
(Decrease) increase in accrued expenses (70,933) 35,515
───────── ─────────
Net cash flows from operating activities 11,857,930 222,672
───────── ─────────
CASH FLOWS FROM FINANCING ACTIVITIES
Payment on redemption of units (16,806,569) (4,454,002)
───────── ─────────
Net cash flows used in financing activities (16,806,569) (4,454,002)
───────── ─────────
NET DECREASE IN CASH AND CASH EQUIVALENTS (4,948,639) (4,231,330) Cash and cash equivalents at the beginning of the period 5,605,874 7,443,733
───────── ─────────
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 657,235 3,212,403
═════════ ═════════
GCC Equity Fund (Managed by Alawwal Invest Company)
The accompanying notes 1 to 11 form an integral part of these interim condensed financial statements.
5
INTERIM CONDENSED STATEMENT OF CHANGES IN EQUITY (UNAUDITED) For the six-month period ended 30 June 2019
UNIT TRANSACTIONS
Transactions in units for the period ended 30 June are summarised as follows:
2019
Units 2018
Units
UNITS AT THE BEGINNING OF THE PERIOD 1,787,738 2,139,998
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Units redeemed during the period (1,181,817) (334,892)
───────── ─────────
NET DECREASE IN UNITS (1,181,817) (334,892)
───────── ─────────
UNITS AT THE END OF THE PERIOD 605,921 1,805,106
═════════ ═════════
2019
SR 2018
SR EQUITY AT THE BEGINNING OF THE PERIOD 23,587,693 26,429,641
─────────
─────────
Profit for the period 2,328,956 2,570,361
Other comprehensive income for the period - -
─────────
─────────
Total comprehensive income for the period 2,328,956 2,570,361
Redemptions of units during the period (16,806,569) (4,454,002)
───────── ─────────
EQUITY AT THE END OF THE PERIOD 9,110,080 24,546,000
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GCC Equity Fund (Managed by Alawwal Invest Company) Notes to interim condensed financial statements (unaudited)
At 30 June 2019
6 1. GENERAL
GCC Equity Fund (the “Fund”) is an open-ended fund domiciled in Kingdom of Saudi Arabia, created by an agreement between Alawwal Invest Company (the “Fund Manager”), a subsidiary of The Saudi British Bank (formerly a subsidiary of Alawwal Bank) (the “Bank”) and investors in the Fund (the “Unitholders”).
The Fund’s Manager registered office is at P.O. Box 1467, Riyadh 11431, Kingdom of Saudi Arabia.
GCC Equity Fund
Commencement Date 30 November 2005
Latest Governing Terms and Condition Date 24 July 2018
Latest Governing Information Memorandum Date 24 July 2018
Category Conventional
Objective Long-term capital appreciation
Allowed Investment Channels GCC equity markets
Money market funds 2. REGULATING AUTHORITY
The Fund is governed by the Investment Fund Regulations (the “Regulations”) detailing requirements for all investments funds operating within the Kingdom of Saudi Arabia and published by the Capital Market Authority (the
“CMA”) on 3 Dhul Hijja 1427H (corresponding to 24 December 2006). The Regulations were further amended on 16 Sha’aban 1437H (corresponding to 23 May 2016) (the “Amended Regulations”). The Fund Manager believes that the Amended Regulations was effective since 6 Safar 1438H (corresponding to 6 November 2016).
3. BASIS OF PREPARATION AND CHANGES TO ACCOUNTING POLICIES 3.1. Basis of preparation
These interim condensed financial statements for the six-month period ended 30 June 2019 have been prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting” (“IAS 34”).
The interim condensed financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Fund’s annual financial statements as at 31 December 2018.
The interim condensed financial statements have been prepared on a historical cost basis, using the accrual basis of accounting except for investments held at fair value through profit or loss that are measured at fair value. These interim condensed financial statements are presented in Saudi Arabian Riyals (“SR”), which is the Fund’s functional currency. All financial information presented has been rounded to the nearest SR.
3.2 New standards, interpretations and amendments
The accounting policies adopted in the preparation of the interim condensed financial statements are consistent with those followed in the preparation of the Fund’s annual financial statements for the year ended 31 December 2018. There are new standards, amendments and interpretations apply for the first time in 2019, but do not have an impact on the interim condensed financial statements of the Fund.
There are other several amendments and interpretations that are issued, but not yet effective, up to the date of issuance of the Fund’s interim condensed financial statements. In the opinion of the Board, these will have no significant impact on the interim condensed financial statements of the Fund. The Fund intends to adopt those amendments and interpretations, if applicable.
GCC Equity Fund (Managed by Alawwal Invest Company)
NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (continued)
For the six-month period ended 30 June 2019
7
4. INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
Investments comprise the following sector exposures as at interim condensed statement of financial position date:
30 June 2019 31 December 2018
% of Cost Market
value Unrealized
gain (loss) % of Cost Market
value Unrealized gain (loss)
Value SR SR SR
Value SR SR SR
Equities
Banks 36.27 2,473,922 3,076,576 602,654 35.95 5,225,474 6,501,277 1,275,803 Materials 14.27 1,159,318 1,210,351 51,033 20.29 3,775,939 3,669,512 (106,427) Commercial &
Professional Svc 5.80 390,057 491,810 101,753 - - - -
Telecommunication
Services 5.03 362,605 426,552 63,947 4.19 684,800 758,185 73,385 Consumer Services 4.73 338,862 401,118 62,256 4.96 893,288 897,763 4,475 Retailing 2.63 211,990 223,275 11,285 3.05 682,205 551,572 (130,633) Food and Beverages 2.36 200,336 199,967 (369) 3.52 775,327 636,016 (139,311) Health Care
Equipment and Svc 2.00 194,817 169,230 (25,587) 1.60 362,884 289,772 (73,112) Energy 1.35 136,555 114,240 (22,315) 1.39 271,818 250,500 (21,318) Utilities 1.44 116,261 122,496 6,235 1.55 347,082 280,847 (66,235) Insurance 1.07 81,564 90,582 9,018 0.70 93,609 125,846 32,237 Food & Staples
Retailing 0.98 78,126 83,313 5,187 -
- - -
Capital Goods 0.41 41,833 34,400 (7,433) 0.88 219,625 158,760 (60,865) Real Estate
Management and
Development - - - - 0.40 94,400 71,980 (22,420)
Transportation - - - - 0.14 33,684 25,956 (7,728)
Financial Services - - - - - - - -
Industries - - - - - - - -
Others 21.66 2,135,308 1,837,964 (297,344) 21.38 5,039,125 3,864,730 (1,174,395)
─── ─────── ─────── ──────── ──── ───────── ─────── ─────────
100.00 7,921,554 8,481,874 560,320 100.00 18,499,260 18,082,716 (416,544)
════ ═══════ ═══════ ════════ ════ ════════ ═══════ ═════════
The geographical exposure of the investment portfolio as at interim condensed statement of financial position date as follow:
30 June 2019 31 December 2018
% of Cost
Market value
Unrealized gain (loss)
% of Cost
Market value
Unrealized gain (loss)
value SR SR SR value SR SR SR
Equities
Kingdom of Saudi
Arabia 78 5,786,246 6,643,910 857,664 79 13,460,135 14,217,985 757,850 State of Kuwait 13 1,455,254 1,128,681 (326,573) 13 3,501,828 2,350,573 (1,151,255) United Arab
Emirates 9 680,054 709,283 29,229 8 1,537,297 1,514,158 (23,139)
─── ────── ──────── ───────── ───── ──────── ──────── ───────
100 7,921,554 8,481,874 560,320 100 18,499,260 18,082,716 (416,544)
═══ ══════ ════════ ═════════ ═════ ════════ ════════ ═══════
GCC Equity Fund (Managed by Alawwal Invest Company)
NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (continued)
For the six-month period ended 30 June 2019
8
5. NET GAIN FROM INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
For the six-month period ended 30 June 2019
SR 2018
SR
Realised gain (loss) 1,185,133 (91,512)
Unrealised gain 976,864 2,495,124
───────── ─────────
2,161,997 2,403,612
═════════ ═════════
6. FAIR VALUES OF FINANCIAL INSTRUMENTS
All assets and liabilities for which fair value is measured or disclosed in the interim condensed financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
• Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities;
• Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and
• Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
Assessing the significance of a particular input requires judgement, considering factors specific to the asset or liability.
The table below presents the financial instruments measured at their fair values as of reporting date based on the fair value hierarchy:
30 June 2019
Level 1 Level 2 Level 3 Total
SR SR SR SR
Investments at FVPL 8,481,874 - - 8,481,874
───────── ───────── ───────── ─────────
Total 8,481,874 - - 8,481,874
═════════ ═════════ ═════════ ═════════
31 December 2018
Level 1 Level 2 Level 3 Total
SR SR SR SR
Investments at FVPL 18,082,716 - - 18,082,716
───────── ───────── ───────── ─────────
Total 18,082,716 - - 18,082,716
═════════ ═════════ ═════════ ═════════
For assets and liabilities that are measured at fair value on a recurring basis, the Fund identifies transfers between levels in the hierarchy by re-assessing the categorisation (based on the lowest level input that is significant to the fair value measurement as a whole), and deems transfers to have occurred at the end of the reporting period during which the change has occurred. During the period, there was no transfer in fair value hierarchy for the financial assets held at fair value through profit or loss.
For all other financial assets and liabilities, the carrying value is an approximation of fair value, including: cash and cash equivalents, receivables and advances and accrued expenses.
GCC Equity Fund (Managed by Alawwal Invest Company)
NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (continued)
For the six-month period ended 30 June 2019
9 7. OTHER EXPENSES
For the six-month period ended 30 June 2019
SR 2018
SR
Brokerage 23,899 3,453
Audit fees 17,355 15,620
Value Added Tax 12,041 12,757
Custodian fees 12,000 -
Standard & Poor’s benchmark fees 7,439 6,639
CMA monitoring fees 3,720 3,906
Tadawul fees 2,480 2,603
Board member fees (note 8) 2,471 2,221
───────── ─────────
81,405 47,199
═════════ ═════════
8. TRANSACTIONS WITH RELATED PARTIES Management fee and other transactions
The Fund is managed and administered by the Fund Manager. For this service the Fund pays a management fee calculated on every valuation day, at an annual rate of 1.95 % of the Fund’s daily net assets. In addition, the Fund Manager charges a subscription fee of 1.5 % on gross subscriptions to cover administration costs and a redemption fee of 0.5% on redemptions within a month of subscribing, which is reinvested in the Fund. Total management fees for the period amounted to SR 199,067 (30 June 2018: SR 255,137).
Other expenses paid by the Fund Manager on behalf of the Fund are charged to the Fund.
The Bank acts as the Fund’s banker and the Fund Manager acted as the custodian to the Fund’s investment until 31 March 2018 after that custody was transferred to Riyad Capital Company.
Board of directors
The independent directors are entitled to remuneration for their services at rates determined by the Fund’s terms and conditions in respect of attending meetings of the board of directors or meetings of the Fund. Independent director’s fees are currently SR 3,000 per meeting up to a maximum of 2 meetings per annum per director which is paid equally by all funds supervised by the board, in addition, SR 2,000 are paid to each independent director by the Fund per annum.
The directors remuneration for the period end amounted to SR 2,471 (30 June 2018: SR 2,221), the fees payable to directors at the period-end were SR 2,471 (31 December 2018: SR 4,267).
Units held by related parties
The balances as at period end resulting from such transactions included in the interim condensed financial statements are as follows:
Related party and nature of relationship Nature of transaction
30 June
2019 31 December
2018
Units Units
Employees of the Bank Units held 500 500
The Bank Units held - 1,000,000
─────── ───────
500 1,000,500
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GCC Equity Fund (Managed by Alawwal Invest Company)
NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (continued)
For the six-month period ended 30 June 2019
10
9. MATURITY ANALYSIS OF ASSETS AND LIABILITIES
The table below shows an analysis of assets and liabilities according to when they are expected to be recovered or settled respectively:
As at 30 June 2019
Within 12 months
After
12 months Total
SR SR SR
ASSETS
Cash and cash equivalents 657,235 - 657,235
Investments at fair value through profit or loss 8,481,874 - 8,481,874
Receivables and advances 6,110 - 6,110
───────── ───────── ─────────
TOTAL ASSETS 9,145,219 - 9,145,219
───────── ───────── ─────────
LIABILITY
Accrued expenses 35,139 - 35,139
───────── ───────── ─────────
TOTAL LIABILITY 35,139 - 35,139
═════════ ═════════ ═════════
As at 31 December 2018
Within 12 months
After
12 months Total
SR SR SR
ASSETS
Cash and cash equivalents 5,605,874 - 5,605,874
Investments at fair value through profit or loss 18,082,716 - 18,082,716
Receivables and advances 5,175 - 5,175
───────── ───────── ─────────
TOTAL ASSETS 23,693,765 - 23,693,765
───────── ───────── ─────────
LIABILITY
Accrued expenses 106,072 - 106,072
───────── ───────── ─────────
TOTAL LIABILITY 106,072 - 106,072
═════════ ═════════ ═════════
10. VALUATION PERIOD
The last valuation day of the period was 30 June 2019 (2018: 31 December 2018).
11. APPROVAL OF INTERIM CONDENSED FINANCIAL STATEMENTS
These interim condensed financial statements are approved by the Fund Board on 4 Dhu’l Hijjah1440H (Corresponding to 5 August 2019).
